1. Basic information 1.1. Programme: ENPI-Annual Action Programme 2008 for the Republic of Azerbaijan 1.2. Twinning number: AZ10/ENP-PCA/HE/14 1.3. Title: Support the State Veterinary Service Prepare for a National System for the Identification of Animals and Registration of Holdings 1.4. Sector: Sanitary and Phyto-Sanitary measures 1.5. Beneficiary country: the Republic of Azerbaijan 2. Objectives 2.1. Overall objective: Increase food safety for consumers and facilitate trade through reforms and modernisation of the sanitary and phyto-sanitary sectors 2.2. Project purpose: Strengthen the veterinary service in general through particular assistance to prepare for a system for the identification and traceability of animals 2.3. Contribution to the EU-Azerbaijan ENP Action Plan The policy framework and strategic objectives for EU - Azerbaijan cooperation is set out in the EU - Azerbaijan European Neighbourghood Policy (ENP) Action Plan adopted in 2006. The ENP Action Plan has a time frame of five years and is oriented towards enhancing the level of approximation of Azerbaijani legislation and standards to those of the EU. The ENP Action Plan defines a considerable number of priority areas for trade and market-related regulatory reforms, in particular trade facilitation issues including customs legislation and procedures, technical regulations, standards and conformity assessment, sanitary and phyto-sanitary (SPS) issues, consumer protection, right of establishment and company law, financial services and markets, taxation, competition policy, enterprise and small and medium size enterprise policy, intellectual and industrial property rights, public procurement and statistics. As indicated in the EU-Azerbaijan ENP Action Plan, cooperation tools, including Twinning and TAIEX, play an important role in the achievement of the Action Plan priorities. The Twinning instrument provides for direct co-operation between EU and Azerbaijani public bodies to support institution-building activities. This Twinning project is aimed at strengthening the veterinary service in general through particular assistance to prepare for a system for the identification and traceability of animals, to increase food safety for consumers and to facilitate trade through reforms and modernisation of the sanitary and phyto-sanitary sectors. It comes as a significant contribution to an objective of the EU-Azerbaijan ENP Action Plan concerning trade related issues, market and regulatory reform - free movement of goods. 1 By establishing a system for the identification of animals and registration of holdings the Republic of Azerbaijan will increase compliance with international requirements regarding the control and food safety of animal origin products for consumers and will facilitate trade. The project will come as an important element of the preparatory work for the accession of the World Trade Organisation (WTO) on the application of SPS measures. The project will also be in line with the Negotiating Directives for an Association Agreement between the EU and the Azerbaijan, launched for inter- service consultation, where one of the conditions proposed for starting the negotiations is that Azerbaijan has joined the WTO. Negotiations will start only if and once the Republic of Azerbaijan is deemed to be ready to take on, implement and sustain the effects of regulatory approximation commitments, including in the SPS field. The project will contribute to the achievement of the following measures set out in the EU-Azerbaijan ENP Action Plan: SPS issues: increase food safety for consumers and facilitate trade through reforms and modernisation of the sanitary and phyto-sanitary sectors: - Ensure implementation of the WTO Agreement on the Application of SPS Measures upon accession of the Republic of Azerbaijan to the WTO, including by nominating a central enquiry point and creating a rapid information system; - Exchange information on and explore possible areas of convergence with EU practice in the field of sanitary and phyto-sanitary issues (e.g. policy, legislation, strengthening of institutions, implementing practices); - Adhere to the Codex Alimentarius; - In the medium term, draw up a first list of measures for gradual convergence towards EU general food safety principles and requirements (e.g. Regulation 178/2002/EC; animal and plant or plant products identification and traceability systems; hygiene in food processing). Start approximation of legislation in this area; - Fulfilment of EU requirements on animal health and for the processing of animal products (c.f.: “General Guidance for third country authorities on the procedures to be followed when importing live animals and animal products into the European Union”, DG SANCO/FVO October 2003); - Work towards interconnection with the EU Rapid Alert System for Food and Feed (EU RASFF). 3. Description 3.1. Background and justification Relevant country background The total population as of 1 July 2008 was 8,676,000. Agriculture is the third largest economic sector after oil and construction, accounting for some 40% of total employment (compared with 1% in the oil sector). A primary development goal for the Republic of Azerbaijan is to reduce dependence on oil and gas. The Republic of Azerbaijan Economic Regions Administrative Regions The total land area of the Republic of Azerbaijan is 86,600 sq km, made up of 82,629 sq km of land and 3,971 sq km of water. The territory is split into 66 administrative regions, or raions, included in 11 economic regions. In total there are 4253 rural settlements. These areas include the exclave of the Naxcivan Autonomous Republic and the (occupied) Nagorno-Karabakh Region. The NAR is currently only accessible by air travel as the road linked is closed. Following agrarian reforms that commenced in 1995, 1.3 million hectares of land have been privatized to approximately 817,700 families. In addition, there are over 620,000 household farms, with an average size of 2.8 hectares (FAO estimates). Overall land use comprises 20.62% to arable crops, 2.61% to permanent crops and 76.77% to other. The primary production area in a roughly north-south band stretching from the northern border above Guba & Xacmaz down to the southernmost city of Astara. Cultivated lands are nominally served by more than 40,000 kilometres of canals and pipelines for irrigation. The varied climate allows cultivation of a wide variety of crops. The major crops are agricultural cash crops, especially grapes, cotton, tobacco, citrus fruits, and vegetables. Livestock, dairy products, and wine and spirits are also important farm products. The private sector produces 97% of agricultural goods. About 42% of cropped land is under cereals - mainly winter wheat. The area cultivated for vegetables and potatoes tripled over the period 1992-2005, livestock production increased by more than 50% in the same period (World Bank estimates). Important summer pastureland areas for sheep grazing in the Nagorno-Karabakh Region, where it is estimated that 3million sheep were grazed, are occupied and not accessible (including part of the Kalbajar Region). Rural poverty in the Republic of Azerbaijan (estimated at 43%) is lower than urban poverty, though rural areas are disadvantaged in terms of access to infrastructure and public services. The share of expenditures on food by Azerbaijani households is high (75%), higher for the rural poor (81%). Rural households produce about half of the food they consume. Region Economic Administrative Regions / Raions Towns City Districts Settlements Rural Administrative Division Rural Settlements 1 Absheron 2 3 - 13 14 32 Baku City - 1 11 59 - - 2 Ganja-Gazakh 9 12 2 42 278 521 3 Sheki-Zagatala 6 6 - 8 162 336 4 Lankaran - Astara 6 8 - 13 156 642 5 Guba-Khachmaz 5 6 - 21 97 473 6 Orta Kur / Aran 16 18 - 39 391 791 7 Yukhari Karabakh 7 10 - 40 189 537 8 Kalbajar Lachin 4 4 - 7 150 442 9 Daglig - Shrivan 4 4 - 8 103 272 10 Naxcivan 7 5 - 8 160 207 TOTAL 66 77 13 258 1700 4253 Justification The Law on Veterinary Medicine of the Republic of Azerbaijan obliges the State Veterinary Service (SVS) to establish a system of ‘Identification of Objects Engaged in Production, Supply (slaughtering), Storage, Processing and Sale of Products subject to the State Veterinary Control, Market Places and other Objects of the State Veterinary Control’, hereon described as an I&R system. This requirement is also scheduled in primary national policy and strategy, notably: the Presidential Decree on Measures for Improving the Management in the Agrarian Sector establishing a State Veterinary Service under the Ministry of Agriculture, and; the State Program on Reliable Food Supply of Population in the Republic of Azerbaijan 2008-2015, by Decree of the President of the Republic of Azerbaijan. However there are no detailed concepts, specifications, regulations or other substantive documents that describe, define or set out in any detail an I&R system. The Law on Veterinary Medicine (art.26) defines agricultural animals and establishments for the purpose of identification, but not holdings (or exploitations). Competence in veterinary matters rests with the SVS with the exception of fish and fish products and food products for export to the EU, which lies with the State Office for the Control of the Consumer Market, SOCCM, subordinated to the Ministry of Economic Development. However, the SVS is the Central Competent Authority for all other animal and animal product groups (including cattle, sheep, goats, pigs and horses). In addition, with the introduction of the One-Window customs clearance procedure at border inspection points, the Customs Committee is responsible for clearance of goods including sanitary and phytosanitary procedures. Except for a bi-lateral trade agreement for fish products (the United Kingdom), the Republic of Azerbaijan has not initiated application for third country status for the import of any animal or animal-origin products, into the EU. International Bodies: OIE, FAO-APHCA and ICAR1 The conclusions of a workshop, involving 18 countries, including the Republic of Azerbaijan, on Animal Identification and Traceability in July 2007 were: 1.